Spielberg, Reliance close to a deal

Mumbai giant moves toward joint venture

Indian business group Reliance is considering a plan to invest $550 million in return for a 50% stake in a new version of DreamWorks, which Steven Spielberg would create after exiting his deal with Paramount.

The Mumbai-based conglomerate was approached as a potential DreamWorks investor by CAA and likely will take at least two more weeks to mull the proposition. Hired by DreamWorks chairman David Geffen, entertainment attorney Skip Brittenham has created a detailed business plan that would give Reliance a key role in the new DreamWorks but grant Spielberg extensive creative control of the reinvented studio.

Details including $500 million or so in accompanying bank debt could take the rest of the summer to sort out, and even the issue of ownership control remains fuzzy. Spielberg has been on the hunt for equity and other financing for several weeks or more. The interest from Reliance was first reported on the Wall Street Journal's Web site.

DreamWorks now is operated by Paramount, but Spielberg might strike a movie distribution deal with another studio once the iconic filmmaker secures his financing. Studios other than Par seeking a distribution relationship with DreamWorks include Universal, Disney and Fox.

A well-placed source noted Wednesday that other equity suitors continue to hover and could pounce upon any sign that Reliance can't or won't complete its deal with Spielberg.

Representatives of DreamWorks and Spielberg did not return phone calls seeking comment. Par spokeswoman Patricia Shin Rockenwagner declined comment, as did Los Angeles attorney Schuyler Moore, who is advising Reliance.

DreamWorks execs have had occasional run-ins with Par brass since their studio was bought by Par parent Viacom in December 2005, and Spielberg is keen to secure a distribution arrangement with Universal. But at the suggestion of advisers such as Geffen and with Spielberg's personal attorney Bruce Ramer keeping watch, the filmmaker agreed to consider offers from other studios described by one source as "extremely favorable."

Spielberg is expected to begin exit negotiations with Par as soon as he secures financing for his reinvention of DreamWorks. The DreamWorks brand would go with him -- along with Geffen and president Stacey Snider -- but any other DreamWorks execs who wish to follow would have to be negotiated away from Par.

Spielberg's contract runs until 2010, but he can terminate it at year's end. Geffen and Snider have similar escape clauses at Paramount.

The DreamWorks name is actually controlled by the separate public company DreamWorks Animation. But if Spielberg were to exit Paramount, DWA would almost certainly withdraw rights to the name from Par and grant them to Spielberg.

DWA's distribution contract with Par runs through 2012.

Reliance is one of India's best-known conglomerates, with an $81 billion market capitalization. The oft-squabbling siblings Anil and Mukesh Ambani run various businesses within the Reliance business portfolio, which in addition to entertainment includes energy and telecommunications assets.

Anil Ambani's Reliance ADA has entertainment interests including India's Adlabs Cinemas, which recently acquired 240 screens in the U.S. Its Reliance Big Entertainment unit also owns businesses active in film production, animation, gaming, music, radio and video distribution, and RBE in May unveiled a $1 billion film fund featuring arrangements with some Hollywood production banners.

U.S. financier George Soros acquired a 3% stake in RBE for $100 million in February.

Nyay Bhushan in New Delhi contributed to this report.